Romania Agri-Food Report - H2, 2013

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Romania Agri-Food Report - H2, 2013

This report covers developments in Romania’s agri-food sector in the second half of 2013. Key statistics data up to November 2013 for detailed short-term indicators (particularly detailed foreign trade) and up to December 2013 for more general indicators is analyzed. The report also includes corporate news for firms including the Netherlands’ Nidera, the UK’s Insight Investment, and the US’s Monsanto.

The two main drivers of the sector over 2013 were last year’s bumper crop, which was only partly offset by lower grain prices, and stagnant domestic demand, which picked up slightly toward the end of the year. Exports of food items—particularly basic grains and oilseeds—surged by 30.5% year on year in value terms. Imports increased by less than 1% year on year. Consequently, our estimates (based on Romania’s foreign trade with food items in January–November 2013, the latest data available) indicate that the country registered a foreign trade surplus for the first time in the past decade.

The food manufacturing sector generated 7.2% higher output in 2013 and its real (PPI-adjusted) turnover increased by 6.1% year on year. The sector’s performance has improved significantly from 2012, when both output and real turnover remained rather steady from the year before. Detailed turnover data indicate that the 6.1% year on year rise in companies’ real revenues was driven mainly by exports, where the real turnover surged by 57.6%. Sales abroad account for less than 10% of local food companies’ turnover. The real turnover generated by the local market—where most of the local companies’ sales are still concentrated (over 90%)—increased by only 1.9% year on year as the demand has strengthened in H2.

Key Points:

• In corporate news, Dutch grain trader Nidera is building a silo for grain and oilseeds in Dragalina, Calarasi county, Romania.

• UK investment fund Insight Investment (with global assets of GBP 271.9bn) has purchased Agricola Borcea, a Romanian farm that operates 13,600ha of arable land in Calarasi county.

• US company Monsanto, the world's largest genetically modified seeds producer, has completed a EUR 27mn investment in its seed processing and conditioning plant in Sinesti, Ialomita county, 30 kilometers from Bucharest.

• Wheat and rye crops were up 37% year on year to 7.3mn tons in 2013; November net wheat exports exceeded 0.5mn tons and 2.73mn tons were exported from July to November.

• The sunflower crop hit a record 2mn tons, up 56% year on year.

• The net maize/corn export hit 0.82mn tons in November alone; July–November exports hit 1.99mn tons.

• A preliminary agreement has been struck for Romania to export 0.5mn cows to China.

Table of Contents

1. Executive Summary

2. QuERI Forecast
2.1 Interpretation Of Data
2.2 Forecast Data 1 [farming, animal husbandry, food manufacturing]
2.3 Forecast Data 2 [key food manufacturing sectors]

3. Structural
3.1 Global Food Prices

3.2 Domestic Food Prices
3.2.1 Food prices corrects downward in H2, but rise by 3% y/y in full 2013; yet below average 4% headline inflation

3.3 Industrial Production
3.3.1 Food industry’s expansion in 2013, driven by 58% y/y rise in exports

3.4 Foreign Trade
3.4.1 Food exports increased by 30.5% y/y to EUR 4.57bn in Jan-Nov, 2013

3.5 Regulations, Policy
3.5.1 Large farmers warn of inefficient use of EU funds
3.5.2 Government cuts VAT rate for bakery to 9% as of September

4. Vegetal Products
4.0.1 Wheat and rye crops up 37% y/y to 7.3mn tonnes in 2013
4.0.2 Sunflower crop hits record 1.9mn tonnes – 62% up y/y
4.0.3 Winter weather might help winter crops – though premature to say

4.1 Foreign Trade
4.1.1 Alfred Toepfer sells Romanian wheat to Egypt at USD 280 per ton
4.1.2 November net wheat exports exceed 0.5mn tonnes; 2.73mn tonnes exported in Jul-Nov
4.1.3 Net maize/corn export hit 0.82mn tonnes in November alone

4.2 Domestic Prices

5. Animal Products
5.1 Meat
Romania to export 0.5mn cows to China – preliminary agreement

5.2 Milk, Dairy

5.3 Sunflower Oil
5.3.1 Bumper crop in 2013 pushes up crushers’ activity

6. Corporate Round-Up
6.1 Dutch Nidera trade builds silo in Romania
6.2 UK investment fund buys EUR 30mn agriculture farm in Romania
6.3 Monsanto completes EUR 27mn investment in seed plant
6.4 Farming machinery producer Biso to build EUR 2mn grain silo in Romania

7. Appendix 1: Food Prices
8. Appendix 2: Output, Employment, Productivity
9. Appendix 4: Foreign Trade
10. Appendix 4: Crop Output
11. Appendix 5: Foreign Trade by farming year, key items

Number of pages: 33
Release Date: Mon, 03 Mar 2014